What future for UDB?

Kampala, Uganda | IAN KATUSIIME | “Should the Uganda Development Bank (UDB) seek capital from the government only? How should it work around Uganda’s short-term investment culture? Should it operate like a private sector bank or continue as the government’s band-aid effort at mitigating market failures”.

According to Ugandan financial sector experts, answers to these questions are becoming more urgent since two years ago when President Yoweri Museveni announced that UDB would be getting a huge capital injection from the government but nothing has happened.

In July 2015, there was wild cheering at a UDB organized client engagement forum, when Minister of Finance Matia Kasaija announced that UDB would get US$1 billion. The bank was undergoing high-level rebranding at the time and optimism was high because Museveni had declared a month before, in a State of the Nation address, that it would be recapitalised. The President, however, spoke of recapitalisation to the tune of Shs500 billion (US$137million) only.

So Kasaija’s figure was jaw dropping even by a politician’s standards of lavish promises and a far cry from Museveni’s promise. In spite of all this, Kasaija received thunderous applause at the event meant to foster relations between the bank and its customers. The contradiction of the two statements, however, prompted speculation in finance circles even back then. Is there is a clear policy on stimulating UDB, was the question.

In his budget speech in June this year, Kasaija said he had provided an additional Shs50billion to the bank in this current financial year 2017/2018 bringing the total recapitalisation so far to Shs150billion but the bank managers have a different story to tell.

But Board Chairman Samuel Sejaaka says the bank received Shs8billion in 2015, Shs4billion in 2016 and Shs17billion in 2017. Total Shs39 billion. So should UDB not look for alternative sources of financing other than government which is always cash strapped?

Patricia Ojangole, the UDB CEO has been reluctant to publicly address these questions.

“I cannot comment on the issues,” she curtly told The Independent.

But Sejaaka said UDB acts on the government’s bidding.

“Our bank is there to help government. Whatever we do must be a function of government,” he said.